Intraday trading: what the SEBI data actually shows

The numbers, before anything else

SEBI has studied this repeatedly, using data from the actual brokers, covering millions of real accounts. This is not opinion or discouragement. It is a count.

The derivatives numbers are worse still. In FY25, SEBI found 91% of individual traders in equity derivatives lost money, with net losses of about ₹1.06 lakh crore, up 41% from the previous year. Over FY22 to FY24 the figure was 93%, with aggregate losses above ₹1.8 lakh crore. That is covered in futures and options.

How it works mechanically

You buy and sell the same stock within a single trading session, between 9:15 in the morning and 3:30 in the afternoon. Nothing enters your demat account, because nothing is held past the close.

You place the order under an intraday product code, often called MIS. If you have not closed the position yourself, your broker closes it automatically shortly before the market shuts. That auto square-off happens at whatever price is available, which may not be a price you would have chosen.

You can also sell first and buy back later, called short selling, which is possible intraday but not in delivery. That means you can lose money when a price rises as well as when it falls.

Leverage, described accurately

Intraday trading allows margin, meaning you can take a position larger than your cash. This is presented as the main attraction and it is the main reason accounts are destroyed.

Suppose you have ₹20,000 and take a ₹1,00,000 position, five times your capital. A 2% move in your favour earns ₹2,000, which is a 10% return on your money. Excellent. A 2% move against you loses ₹2,000, which is 10% of your capital gone on a move the stock makes on an ordinary morning.

A 20% adverse move, well within the range of a single bad day in a volatile stock, wipes out your entire capital on a five times position. The stock did not have to collapse. It just had to move a bit further than you expected while you were holding more than you owned.

SEBI has progressively tightened margin rules, including upfront margin collection and peak margin reporting, precisely because leverage was destroying retail accounts. The available leverage today is far lower than it was a few years ago, and that is a protection rather than a restriction.

The cost problem

This is the part that turns a marginal strategy into a losing one, and it is rarely modelled by beginners.

Every intraday trade has two legs, and each leg carries brokerage, exchange transaction charges, GST, SEBI turnover fees and stamp duty. STT applies on the sell side of an intraday equity trade. None of these individually looks like much.

Now do the arithmetic that matters. Suppose your round trip costs are roughly 0.05% of turnover. If you place five trades a day, that is 0.25% of turnover daily. Across about 250 trading days, your strategy has to overcome a very large cumulative drag before it earns you a single rupee.

This is the mechanism behind SEBI observation that loss-making traders placed more trades on average than profitable ones. Activity is not the same as edge. More trades means more cost, and cost is certain while profit is not.

How intraday is taxed

This surprises people, so it is worth stating clearly. Intraday equity trading in India is treated as speculative business income, not as capital gains.

• Profits are added to your total income and taxed at your slab rate, which can be higher than the 20% short term capital gains rate.
• Speculative losses can only be set off against speculative gains, and can be carried forward for four years.
• You may need to maintain books and file a different ITR form. If turnover is significant, an audit requirement can apply.

This is a genuinely different tax regime from investing, and getting it wrong causes real problems at filing time. If you trade intraday with any regularity, a qualified professional is worth the fee. This lesson is general information, not tax advice.

Who this actually suits

Not a lecture, just a description of what the activity requires.

Intraday trading may suit you if you can watch the market for hours during the working day, you have capital you could lose entirely, you are willing to keep detailed records and review them, you accept a year or more of learning with no income, and you have a written method rather than a set of reactions.

It does not suit you if you have a full time job that needs your attention, you are using money you will need, you are hoping to replace an income, you found the idea through a Telegram group or a video promising monthly returns, or you have not yet built an emergency fund.

One more observation from the SEBI data that deserves attention. Only about 10% of these traders also ran a mutual fund SIP. The overwhelming majority were treating the market as a short term opportunity rather than building anything. That pattern, more than any individual trade, is what the numbers are describing.